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McKenzie County produces bulk of state’s oil and gas

Posted 8/19/14 (Tue)

By Kate Ruggles
Farmer Staff Writer

Last month, Lynn Helms, director of Mineral Resources for the North Dakota Industrial Commission (NDIC), predicted that though the state had already reached past the million barrel per day milestone, there was still another surge yet to come. Now that June’s numbers are in, it looks like he was right. According to the production report for June, the state saw a five percent increase in both oil and natural gas production.
“That is almost double the overall normal projection, so it makes up for the loss that we saw in December,” states Helms.
The production report states that North Dakota produced 1,092,617 barrels of oil per day and 1,253,154 MCF of natural gas per day. And McKenzie County not only led the state in production, it accounted for 32.5 percent of the state’s oil and 41.6 percent of the state’s total natural gas production.
In the month of June, McKenzie County produced 10,665,261 total barrels of oil and 15,628,542 total MCF of natural gas.
Helms also states that June allowed the state to catch up on well completions.
“We ended June with only 585 wells waiting on completion services and that should come down substantially with the months of warm weather and less winds yet to come,” states Helms.
Rig counts are climbing slightly, due to summer activity, as is permitting. The reason for increased permitting, according to Helms, is that operators are trying to get their multi-well pads built before winter arrives.
In addition to production, the NDIC had two big issues to report on – flaring and field treatment.
Flaring continues to be a source of concern for Helms and the NDIC because the statewide flaring percentage is still holding at 28 percent.
Helms states that the NDIC has not yet done a full audit. But they plan to begin using their auditing tools so they can be ready to go by Oct. 1, when the 74 percent gas capture goal kicks in.
The audit work that the NDIC has done shows that flaring in the Bakken and Three Forks is slightly higher than the overall state average.
“Gas capture in the Bakken and Three Forks is 71 percent, versus 72 percent statewide,” states Helms. “And when you contrast that number with the gas capture on the Fort Berthold Reservation, which is 67 percent, we will have some work to do.”
The primary reason for the lack of flaring reduction in the Bakken and Three Forks is the fact that the Tioga Gas Plant, though its expansion work was completed at the end of March, is still only operating at just over half of its capacity.
The bottleneck, according to Helms, is a project to expand gas gathering from the Keene area, south of Lake Sakakawea.
“It is actually an old pipeline right of way. But because of federal permitting rules, they had to apply for a permit to do an archaeology survey, to apply for a permit to do a little bit of mechanical work right on the lake shore on the south side of Lake Sakakawea,” states Helms. “They got the permit to do the work, so now the work is done and they are waiting on the permit to do the real work.”
Helms states that has not only caused the Tioga Gas Plant to run at less than 60 percent of its full nameplate capacity, but it illustrates some of the difficulties in reducing flaring, especially on federal lands.
Helms’ hope is that the summer weather holds long enough to get through the permitting phase, and that the good weather lasts long enough for the project to be completed.
“If we can bring that plant up to full capacity over the summer, there could be some significant changes in flaring reduction,” states Helms.
Finally, there is talk of a public hearing regarding the field treatment of crude oil. The hearing is coming as a result of a debate regarding the safety of crude oil transport by rail. While the debate contains many different aspects, the specific issue of field treatment falls solely under the responsibility of the NDIC, and it could result in the branding of the Bakken crude oil product.
“We need to make sure that the cargo in the rail cars, if it’s titled Bakken Crude oil, has gone through the right processes to fit into that category,” states Helms. “We need to make sure that it doesn’t contain things that don’t belong, and that it is crude oil like you would expect from the Bakken.”
Helms states that if the hearing helps the NDIC successfully establish a standard for Bakken crude field treatment and ensures that the crude going into the rail car is what everyone expects, it could help create a Bakken crude brand.
“The majority of operators whose big production is Bakken crude oil look forward to having a name brand,” states Helms. “And if we do the right things and the oil fits the definitions we establish, it could fetch a premium price like West Texas Intermediate Oil.”
The date and criteria for the hearing has yet to be announced, but is scheduled to be released soon.